The Strategy Concept 5Ps

The Strategy Concept1

The 5 Ps for strategy

Human nature insists on a definition for every concept the field of strategic management
cannot afford to rely on a single definition of strategy This article suggests 5 definitions of
strategy: as a plan, ploy, pattern, position and perspective, some of which are interrelated.

Strategy as a plan

Strategy is a plan, some sort of consciously intended course of action, ad guideline to deal
with a situation.
Drucker: Strategy is a purposeful action, Moore: Strategy is design for action.
Strategy can exist in the military, game theory and management (defined as a unified,
comprehensive, and integrated plan, designed to ensure that the basic objectives of the
enterprise are achieved.

As a plan, strategy can be a ploy (a manoeuvre) too just a specific manoeuvre intended to
outwit the competitor or the opponent

In the field of strategic management strategy focuses attention on its most dynamic and
competitive aspects

Porter refers to Market Signals (including discussion of the effects of announcing moves, the
use of the fighting brand and the use of threats of private antitrust suits) and also the
competitive moves (including actions to pre-empt competitive response). To add Porter also
refers to defensive strategy that discusses a variety of ploys for reducing the probability of
competitor retaliation (or increasing his perception of your own).
Schelling describes the topic of ploys to outwit rivals in a competitive or bargaining situation.

Strategy as a pattern

Defining strategy as a plan is not sufficient; we need a definition that encompasses the
resulting behaviour.
Strategy is a pattern in a stream of actions
Strategy is consistency in behaviour, whether or not intended (for example Picasso drawing
the same pattern over and over again).
o Another example would be how GMs strategy boils down to doing a little bit of
everything until the market decides where it is going.

Inferring consistency in behaviour and labelling it as strategy

The definitions of strategy as a plan and as a pattern may be independent from each other:
o Plans go unrealized (intended strategy planned before acting).
o Strategies appear without pre-conception (realizing it after acting).
o Strategies may result from human actions therefore but not human design (Humes)
1 Compiled from published sources by Prof. Ashok K. Sar for use in KSOM
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Therefore one might have the deliberate strategy (where intentions that existed previously
were realized), and emergent strategies, where patterns developed in the absence of
intentions or despite them (which went unrealized).

Strategies about what?

Many authors respond to this question by describing the deployment of resources, however
the question remains but which resources and for what purposes?
Strategy refers to the important things, tactics to the details more formally, tactics teaches
the use of armed forces in the engagement, strategy the use of engagements for the object of
the war.
In retrospect details as well may prove strategic. For example: Henry Ford lost his war with
General Motors because he only painted his cars black.
Rumlet notes: one persons strategies are anothers tactics, what is strategic depends on
where you sit and when you sit (what seems tactical today may prove strategic tomorrow!).

Strategy as a position

The fourth definition is that strategy is a position specifically a means of locating an

organization in what organization theorists like to call an environment by this definition
strategy becomes the mediating force or match according to Hofer and Schendel.
Organization is the internal content and the environment is the external content.
In management terms that is a product-market domain, the place in the environment where
the resources are concentrated (what McNichols calls a root strategy).
Strategy is essentially a descriptive idea that includes an organizations choice of niche and
its primary decision rules for coping with that niche.
The definitions of strategy as position, however, implicitly allows us to allows us to open up
the concept, to so-called n-person games (that is, many players), and beyond. Strategy can
therefore be defined in the context of a single competitor as well as multiple competitors.
However strategy can be extended beyond the purpose of dealing with competition.
Strategy is about is creating situations for economic rents and finding ways to sustain them
Rumelt
Astley and Fombrun also introduce the notion of collective strategy strategy perused to
promote cooperation between organizations, even would-be (potential) competitors.
o Collective strategies might be informal arrangements, joint ventures, directorates or
even mergers. This definition might even refer to political strategies.

Strategy as a perspective

The fifth dimension looks inside the organization, indeed inside the heads of the collective
strategists. Here, strategy is a perspective, its content consisting not just of a chosen position,
but of an ingrained way of perceiving the world:
o Some organizations are aggressive pacesetters, creating new technologi9es and
exploiting new markets.
o Others perceive the world as set and stable, and so sit back in long established
markets and build protective shells around themselves, relying more on political
influence than economic efficiency.
o Other organizations favour marketing and build a whole ideology around that (IBM)
o Others treat engineering in this way (Hewlett-Packard).
o Others concentrate on sheer productive efficiency (McDonalds).
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Philip Selznick, wrote about the character of an organization.

Anthropologists refer to the culture of a society and sociologists to its ideology, military
theory write of the grand strategy of armies, while management theorists have used terms
such as the theory of the business.
Finally, strategy is a concept something that is perceived.
This concept is shared amongst the members of an organization, through their intentions
and/or by their actions.
We are entering realm of the collective mind individuals united by common thinking
and/or behaviour. Therefore one has now to read the collective mind.

Interrelating the Ps

The relationships between the above definitions can be more involved than that.

Some consider perspective to be a plan (Lapierre); others describe it as giving rise to plans.

Hedberg and Jonsson claim that strategies, by which they mean more or less well integrated
sets of ideas and constructs, are the causes that mould streams of decisions into patterns.
It is also described as the framework to determine the actions of the organization.
Hondas strategy was not to go to America with the main intention of selling small family
motorcycles at all but once it was clear to Honda executives that they had wandered into
such a lucrative strategic position, that presumably became their plan. In other words, their
strategy emerged, step by step, but once recognized, was made deliberate.
We may still ask how that perspective arose in the first place. The answer seems to be that it
did so in a similar way, through earlier experiences: the organization tried various things in
its formative years and gradually consolidated a perspective around what worked.
Interacting with the world, helps people and organization to find their character through the
use of their innate skills and natural propensities.
Once established, perspectives are difficult to change, as they can become subconscious in
the minds of the organizations members.
When that happens, perspective can come to look more like pattern than like plan in other
words, it can be found more in the consistency of behaviours than in the articulation of
intentions.
If perspective is immutable then change in plan and position is difficult, unless compatible
with the existing perspective. For example the case of Egg McMuffin some proponents
said it brought McDonalds into a new market, the breakfast one, extending the use of its
facilities. Opponents said that is nonsense, nothing changed but a few ingredients. Position
changed; perspective remained the same this was the answer though. The position could
be changed so easily because it was compatible with the existing perspective.

The need for eclecticism in definition

Not all plans become patterns nor are all patterns that developed planned; some ploys are
less than positions, while other strategies are more than positions yet less than perspectives.
In studying strategy as a plan, we must somehow get into the mind of the strategists, to find
out what is really intended.
As a ploy strategy takes us into the realm of direct competition, where threats and feints and
various other manoeuvres are employed to gain advantage.

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As a pattern strategy focussed on action, reminding us that the concept is an empty one if it
does not take behaviour into account. Strategy as pattern also introduces converge, the
achievement of consistency in behaviour.
As positions, strategy encourages us to look at organizations in context, specifically in their
competitive environments how they find their positions and protect them in order to meet
competition, avoid it or subvert it.
Finally, as a perspective strategy raises intriguing questions about intention behaviour in a
collective context. If we define organization as collective action in the pursuit of common
mission (a fancy way of saying that a group of people under a common label whether an
IBM or a United Nations or a Luigis Body Shop somehow find the means to cooperate in
the production of specific goods and services).
Therefore, strategy is not just a notion of how to deal with an enemy or a set of competitors
or a market, as it is treated in so much of the literature and in its popular usage. It also draws
us into some of the most fundamental issues about organizations as instruments for
collective perception action.

Why Organizations Need Strategies

Setting Direction

Most commentators, focussing on the notions of strategy as deliberate plan and market
position, argue that organizations need strategy to set direction for themselves and to
outsmart competitors, or at least enable themselves to manoeuvre through threatening
environments.
If its strategy is good, the organization can make various mistakes, indeed can sometimes
even start a weaker position and still come out on top according to Chandler.
The competitors with the better strategy will win or as a corollary that the competitor with a
clear strategy will beat the one that has none.
But no shortage of failure can probably be attributed to organizations that got their strategy
right while messing up their operations. Indeed, an overdose of strategic thinking can
obstruct effectiveness in the operations, which is exactly what happened to titanic. The ship
did not go down because they were rearranging the deck chairs at all, but for exactly the
opposite reason: they were so busy glorifying in the strategy of it all - that boat as a brilliant
conception which they neglected to look for icebergs.
As for the assumption that any strategy is always better than one sometimes it is better to
move slowly, a little bit at a time, looking not too fart ahead but very carefully so that
behaviour can be shifted on a moments notice.
The Titanic experience shows how a good strategy can blind an organization to the need to
manage operations.

Focusing effort

A second major claim, looking inside the organization, is that strategy is needed to focus and
promote coordination of activity. Without strategy, an organization is a collection of
individuals, each going his or her own way, or else looking for something to do.
The essence of the organization is a collective action.
Alfred Sloan notes that some kind of rational policy was called for (at General Motors,
where he was the CEO) it was necessary to know what one was trying to do.

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Defining the organization

Third, strategy is needed to define the organization.

As plan or pattern, but especially as position or perspective, its strategy defines the
organization, providing people with a shorthand way to understand it and to differentiate it
from others.
Christensen et al. states the power of strategy as a simplifying concept that enables certain
outsiders to know the business without being in the business.
In the early 1980s, the business press was very enthusiastic about General Electric. General
Electric is in the process of becoming a somewhat simpler company to understand the
CEO stated that the company would focus on three major segments: core businesses, high
technology and services.
A clear articulated strategy becomes a surrogate for that understanding.
On the other hand, the enthusiasm generated by a clear strategy a clear sense of mission
can produced a host of positive benefits i.e.: the stock analysts not only helped to raise
GEs stock price, they also helped to fire up the enthusiasm of the companys suppliers and
customers, as well as the employees themselves, thereby promoting commitment which can
improve performance. Thus strategy may not only help technically through the coordination
of work but also emotionally through the development of beliefs.
An organization without a strategy would be like an individual without a personality
unknown, and unknowable.
Sometimes lack of strategy is temporary and even necessary e.g.: it may be a stage in the
transition from an outdated strategy to a new, more viable one. Or it may reflect the fact that
an environment has turned so dynamic that it would be folly to settle on any consistency for
a time (as in the oil companies in 1973 when the oil crisis occurred).

Providing consistency

A return to the notion of strategy as a simplifying concept may provide the clearest reason as
to why organizations seem to need strategies. Strategy is needed to reduce uncertainty and
provide consistency (however arbitrary that may be), in order to satisfy intrinsic needs for
order, and to promote efficiency under conditions of stability (by concentrating resources
and exploiting past learning).
An organization without a strategy experiences confusion; its collective cognition can
become overloaded, its members having no way to deal with consistency.
In this sense, a strategy is like a theory, indeed it is a theory, a cognitive structure to simplify
and explain the world, and thereby facilitate the action.
Good strategies, like good theories simply minimize the amount of distortion.
Strategy is not about adoptability in behaviour but about regularity in behaviour, not about
continuity but about consistency. Organizations have strategies to reduce uncertainty, to
block out the unexpected and, as shown here, to set direction, focus effort, define the
organization. Strategy is a force that resists change, not encourages it.
Consistency provides us with a sense of being in control.
Moore makes this point as well: strategy is a relief from the anxiety created by complexity,
unpredictability, and incomplete knowledge. As such, it has an element of compulsion about
it.
For one thing strategy enables the organization to concentrate its resources and exploit its
opportunities and its own existing skills and knowledge to the very fullest.

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Moreover once established, strategies reduce the need to keep learning in a broad sense. To
be efficient, at least in a stable environment, means to get on with things without the need to
think them through each time.
An organization that constantly puts its strategies into question will impede its ability to get
on with things.
Targeting and serving customers instead of debating which markets are best, buying and
operating machines instead of wondering about different technologies, re-arranging deck
chairs and looking for icebergs.
The problem with all this, of course, is that eventually situations change, environments
destabilize, niches disappear. Then all that is constructive and efficient about an established
strategy becomes a liability.
Strategic change in the literature may come easy, management of the change itself, in
practise, especially when it involves perspectives, comes hard.
Kuhn notes that: retooling is expensive. This is especially true when it is not just machines
that have to be retooled, but human minds as well!
Strategies are therefore to organizations what blinders are to horses: they keep them going in
a straight line, but impede the use of peripheral vision.

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